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Reading Between the Line Items

Blair Burnett, ACCC Health Policy Analyst

February 15, 2018

Implications of the Budget Deal & the President’s FY2019 Budget for Oncology

After another brief government shutdown, Congress passed the Bipartisan Budget Act of 2018 on Friday, February 9. Healthcare provisions embedded within this legislation will have an important impact on clinicians and patients. Of note, the two-year budget deal raises budget caps by $300 billion, funds the federal government through March 23, 2018, prevents another sequester that would have been triggered by the recent tax reform legislation, and gives Congress additional time to pass a full-year omnibus appropriations bill for Fiscal Year (FY) 2018. Read on for high-level takeaways, as well as resources for more details about the bill.

Bipartisan Budget Act of 2018 Takeaways:

Extension of CHIP funding for an additional five years (2024-2027)

Prevention of the 4% sequester in Medicare that would have been triggered by the recent tax reform bill, but also an extension of the current 2% Medicare sequester through 2027

Inclusion of a technical fix to the Medicare Access and CHIP Reauthorization Act (MACRA) Quality Payment Program (QPP) so that Part B drug payments are excluded from MIPS adjustments

Inclusion of a payment rate freeze that will stabilize payments through 2019 for key radiation oncology services delivered in freestanding clinics

Addition of $2 billion in funding for the National Institutes of Health (NIH) over the next two years

Reduction of funding to the Affordable Care Act’s Prevention and Public Health Fund by $1.35 billion over 10 years

Reauthorization and continued funding for community health centers (CHCs) and teaching health centers

Repeal of the Independent Payment Advisory Board (IPAB), created by the ACA, which would have triggered reduced Medicare reimbursement if expenditures had risen beyond a designated amount

Does NOT include language for ACA market stabilization legislation that would address continued uncertainty in the private insurance market

Does NOT include a provision that would have made biosimilars ineligible for pass-through status, meaning 340B hospitals will still receive ASP+6% for biosimilars

Just a few days later, on Monday, February 12, the White House released The President’s Budget for FY2019, which calls for $4.4 trillion in spending and proposes to add $7 trillion to the deficit over the next 10 years.

The President’s budget proposal is meant to be a blueprint to Congress, and it’s widely believed that this package, as a whole, has little to no chance of gaining traction in Congress. However, it’s likely we will see specific policies outlined within the President’s Budget adopted by Congress or achieved through administrative action. Proposals within the President’s Budget provide insight into the Administration’s priorities for healthcare in 2019, specifically under the leadership of Department of Health and Human Services (HHS) newly appointed Secretary Alex Azar.

Key proposals from President Trump’s proposed FY 2019 budget:

Proposed 21% reduction in funding to the Department of Health and Human Services (HHS), which translates to $17.9 billion less than the agency received in 2017. The President’s budget funds HHS at $68.4 billion. While this total includes $13 billion in new funding to combat the nation’s opioid epidemic, it also reflects a $1 billion reduction in funding for medical research at NIH as well as elimination of various cancer screening and prevention programs at the Centers for Prevention and Disease Control (CDC).

Proposal to allocate $20 million to the FDA’s Oncology Center of Excellence. Despite this funding injection, various patient and provider advocacy groups are still wary of how cancer screening and prevention programs will be impacted due to overall cuts to HHS.

Inclusion of language that calls for Congressional action to pass a law that eliminates the Affordable Care Act completely and instead focuses on giving states block grants to establish their own health systems. Legislation similar to this failed to pass Congress last year.

Proposes to allow the Centers for Medicare & Medicaid Services (CMS) to move certain drugs from Medicare Part B to Part D where there are “savings to be gained from price competition.”

Proposes to set an inflation limit to how fast ASP can go up (each quarter when CMS establishes the ASP+6% payment amounts, CMS would pay the lesser of (1) the actual ASP+6% or (2) the inflation-adjusted ASP+6%).

Proposes to reduce Wholesale Acquisition Cost (WAC) payments from 106% to 103%—this would have a big impact on newly launched products without ASP data.

Proposes to modify the CMS' recent changes to the 340B Drug Pricing Program finalized in the 2018 Medicare Hospital Outpatient Payment System final rule. Rather than making the reductions budget-neutral (as it does now)—the savings would be redistributed to hospitals that provide uncompensated care equaling at least 1% of their patient care costs. Hospitals that don’t meet that charity care threshold would have their savings go back to the Medicare Trust Fund.

Proposes to eliminate all grandfathering and exemptions from CMS’ policy to reduce payment to new off-campus hospital-based departments. The proposed budget for HHS explains that this proposal would eliminate all current exemptions for off-campus hospital outpatient departments, causing currently grandfathered off-campus hospital outpatient departments, emergency departments, and cancer hospitals to be reimbursed under the Medicare physician fee schedule—a continued shift towards site-neutral payment policy.

Proposal to simplify the Merit-based Incentive Payment System (MIPS) in 2021 “by adopting broader claims and beneficiary survey calculated measures that assess clinician performance on quality and cost during the performance period at the group-level only.”

Inclusion of language that seeks to fund Cost-Sharing Reduction payments through FY2019

Proposal to establish a beneficiary out-of-pocket maximum in the Medicare Part D catastrophic phase. The HHS budget clarifies that this proposal would increase Part D plan sponsors’ liability for catastrophic coverage from 15 percent to 80 percent over four years, thus decreasing Medicare’s reinsurance liability from 80 percent to 20 percent.

Proposal to exclude manufacturer discounts from the calculation of beneficiary out-of-pocket costs in the Medicare Part D coverage gap. Currently, amounts paid by manufacturers as coverage gap discounts count toward a beneficiary’s out-of-pocket costs, for purposes of determining when catastrophic coverage begins. If enacted, this change would significantly increase the time it takes for a beneficiary to reach catastrophic coverage.

For a deeper dive on the both the budget deal and the President's proposed FY 2019 budget, here are some resources: